CALGARY — TransAlta Corp., facing charges of utility market manipulation in Alberta, has agreed to pay $149 million to settle unfair pricing allegations in California dating back to 2000-2001.

On Wednesday, the U.S. Federal Energy Regulatory Commission approved the payment by subsidiary TransAlta Energy Marketing to public utilities affected by manipulation of electric and natural gas prices during the California energy crisis 13 years ago.

The crisis was marked by large-scale blackouts due to a shortage of power as the state deregulated its power markets.

“We find that the settlement is fair and reasonable and in the public interest, and it is hereby approved,” the FERC said in a decision posted on its website, noting that the deal is expected to “avoid further litigation, provide monetary consideration, eliminate regulatory uncertainty, and enhance financial certainty.”

The decision explains that FERC instituted formal hearing procedures under the Federal Power Act in 2000 to investigate the “justness and reasonableness” of public utility sellers’ rates in the California Independent System Operator Corp. and California Power Exchange markets.

In 2002, FERC started a fact-finding investigation into alleged manipulation of prices and, in 2003, directed staff to “investigate anomalous bidding behaviour and practices,” the decision says.

TransAlta president and chief executive Dawn Farrell welcomed resolution of the long-standing issue while pointing out that TransAlta made no admission of wrongdoing.

“We’re pleased to move forward and focus on a positive commercial relationships in with the State of California,” said Farrell. “It was in the best interests of our company to settle this matter. It was time to put this behind us. The settlement recognizes that TransAlta admits to no wrongdoing during the crisis.”

The settlement amount will be funded from TransAlta’s estimated receivables of $52 million and interest of $45 million, according to the decision. TransAlta will also make two additional separate payments of $26 million, the first of which will be due within five business days of the settlement’s effective date.

In Alberta, meanwhile, charges that TransAlta manipulated power prices during the winter of 2010 and 2011 are to go to a public hearing before the Alberta Utilities Commission in August.

The Market Surveillance Administrator, the power market regulator, claims that TransAlta engaged in “anti-competitive conduct” in 2010 and 2011 by taking three coal-fired power plants off-line on four cold days, during high-demand hours and in periods when other players in Alberta’s competitive power market were the least likely to be able to pick up the slack.

The activity drove up electricity prices and allowed TransAlta to reap as much as $16 million in additional profits, it claims.

TransAlta denied it broke any rules and lodged a complaint against the MSA, which was dismissed by the AUC.

TransAlta spokeswoman Stacey Hatcher said the California and Alberta cases “could not be more dissimilar.”

She said in an e-mail that TransAlta was invited to provide power to California during an extraordinary period of energy need in 2000 and 2001.

“What followed was simply a disagreement over pricing of the power,” she said.

In 2012, TransAlta was fined $370,000 for power price manipulation in Alberta but said at the time the rules were unclear.

dhealing@calgaryherald.com

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